Don't make additional Maui hospital a state trend

THE ISSUE

A state agency has begun to hear testimony about a proposal to authorize a second hospital on Maui.

MAUI is likely to receive a second acute-care hospital, but that should not create a trend for more hospitals throughout the state. Other hospitals are struggling to fill staffing needs as nurses retire and stand in line for health care with other baby boomers. State and federal assistance will be needed to allow the existing hospitals to provide the increased care projected.

A state health advisory committee recommended approval earlier this month of a new hospital at Kihei called the Malulani Health and Medical Center, and a panel of the State Health Planning and Development Agency has begun hearings on the application. The hospital would compete with the Maui Memorial Medical Center.

The proposal has the support of Maui Mayor Alan Arakawa and Gov. Lingle, a two-term mayor of the Valley Isle. Arakawa said some Maui residents now seek treatment at Oahu hospitals because of their lack of confidence in Maui Memorial, and Lingle predicts that the privately operated Malulani and state-operated Memorial will "complement each other."

Under the proposal, Malulani would be built and operated by a nonprofit Malulani Health Systems Inc. and Texas-based Triad Hospitals Inc., which operates 51 hospitals and 12 ambulatory surgery centers in 16 mainland states. Triad would provide 80 percent of the $211 million to build the 150-bed hospital, emergency care and other facilities.

Maui Memorial has 202 beds and plans to add 29 more in September. Wesley Lo, its chief executive officer, says he expects Malulani will shrink its annual revenues by $55 million.

Other hospitals face similar revenue problems without the addition of new competition. According to Hawaii Pacific Health, which operates Kapiolani, Pali Momi, Straub and Wilcox hospitals, Hawaii hospitals are experiencing a $51 million annual shortfall between costs and government reimbursement under the Medicare and Medicaid programs. They had a net loss of $159 million from 2000 to 2003, and the Healthcare Association of Hawaii reports that they lost more than $100 million providing medical care for those who could not pay for it.

Russell Johnson, Maui Memorial's fiscal officer, says Malulani has overestimated the demand for medical care and underestimated expenses, including wages for nurses. That would not be surprising, since nurses' salaries are sure to soar because of a shortage of nurses.

Hawaii's shortfall of registered nurses was 1,041 in 2000 and is projected to reach 2,267 by 2010 and 4,600 by 2020. Nurses at Kauai's Wilcox Hospital have agreed to a 21 percent wage increase over three years but remain on strike because of other issues.